Energy Billing Options Explained

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Nothing matches the dread of opening an energy bill – especially when you’re expecting a big one – but choosing the right billing options for your preferences and budget can at least help take the edge off.

You may not realise the billing options that are available to you, meaning that managing those bills may be a bit easier than you think. That’s why Canstar Blue has produced this guide to energy billing options, to help you avoid that classic ‘bill shock’. We’ll cover:

But first, let’s start with the basics.

How does energy billing work?

Understanding how energy billing works is the first step to better-managing your bills and removing some of the stress that comes when they arrive in the mail (or email). The way you receive electricity bills depends on the type of meter you have:

  • If you have an old accumulation or interval meter, you’ll need a meter reader from your local energy distributor to visit your property (usually just once every three months) and provide a reading to your energy retailer for billing purposes.
  • If you have a smart meter, there’s no need for anyone to visit your property, with your meter read remotely by your energy distributor before passing the details onto your retailer for billing.

Depending on how and when your meter is read, you may be eligible for either monthly or quarterly energy billing.

Cartoon man scratching head with energy bills

Monthly vs quarterly energy billing

Would you rather pay four or 12 energy bills a year? That’s a choice that most energy retailers will make available, and it’s important to think carefully about what works best for you. Sure, the idea of receiving just four bills a year sounds preferable in theory, but this means those four bills will be much bigger than 12 smaller ones spread over time. Here’s an example:

Let’s take the average energy bill in New South Wales of $1,627 per year. If a household with this level of electricity usage received monthly bills, they would pay 12 bills of just over $135 (give or take a little to allow for seasonality). However, if the household receives quarterly bills instead, this would mean four bills of about $406. That’s when the serious bill shock kicks in.

Which billing frequency is most popular? A Canstar Blue survey of more than 7,000 households in early 2020 found:

  • 73% receive quarterly energy bills
  • 20% get their energy bills monthly
  • 6% indicated a different billing frequency
  • 1% were not sure how often they are billed

Important note about monthly bills

If you prefer the idea of monthly energy bills, there is an important catch to be aware of if your home does not have a smart meter. Given that a meter reader will only be sent to your property every three months, you’ll probably need to receive estimated bills in between the accurate bills actually based on meter readings. These quarterly bills will then be adjusted to settle your true balance accordingly. If you have a smart meter at your property, you should be able to request accurate bills every month.

Other payment frequency options

Realistically, you’ll only have the option of either monthly or quarterly energy billing. However, it’s not unheard of for energy retailers to allow for ANNUAL billing. This means the customer would pay for the whole year’s worth of energy upfront, which would be an estimated amount based on previous energy usage history.

At the other end of the spectrum, customers on an energy payment plan as part of a hardship policy may be asked to make payments every week or two to clear their outstanding balance sooner. Even if you’re not involved in a hardship policy, you could still ask your retailer for a bill smoothing option so you can pay the same amount for power every week or two, making budgeting that little bit easier.

Direct debit on computer keyboard

Direct debit vs manual payments

So, we’ve looked at how often you can receive energy bills, but what about how you go about paying them? It’s also important to choose the payment method that works best for you and your budget. In most cases, your electricity retailer will be keen to get you to sign up for direct debit payments, meaning the bill amount will automatically be withdrawn from your nominated bank account. However, if you don’t like the idea of direct debiting, here are the manual payment options usually available:

  • If you have an online account, you could make a payment through your retailer’s website
  • You could also pay through your energy retailer’s app (but watch out for small card fees)
  • Most retailers allow for payments to be made via online money transfer sites like BPAY or PayPal
  • Under industry regulations, some retailers must also accept payments by mail (for cheques and money orders) as well as over the counter at Australia Post branches
  • Plus, you could always just pick up the phone and make a card payment

Many energy customers simply prefer the convenience of automatically paying by direct debit, but there are things to be aware of, whether this is your favoured payment option or not.

Important note about direct debit payments

Some people prefer to pay their energy bills manually every time, whether that’s because they just don’t like having direct debits set up to automatically take money from their account, or because they’re worried about not having the money readily available at the right time. If you don’t like the idea of direct debit billing, it’s important to understand that this could mean you end up paying more for energy than you need to. So, the question is, why?

  • Energy retailers typically make their best offers available to customers who make their life a little easier. Setting up direct debit payments is one way of doing this.
  • As a result, energy retailers regularly provide direct debit discounts to encourage customers to set up automatic payments. These discounts are usually fairly modest, but still worth having.

If you DO like to pay by direct debit, the only thing to be aware of is that, if you don’t have the money ready to roll in your bank account on the bill’s due date, your bank may not accept the withdrawal attempt from your energy retailer, meaning you’ll be charged a late payment fee. You may also incur a fee from your bank as a result.

Compare Energy Prices

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

So, what’s the best way to pay?

Whether you pay monthly, quarterly, by direct debit, or a manual form of payment, the most important thing is that you pay your bills on time! Failing to do so could mean you’re charged extra for a late payment – and no one wants that!

Monthly bills are certainly convenient in that you’ll be paying less, more often. Compare this to those big quarterly energy bills that always have a habit of blowing out your budget. The decision here is simply one of preference, but consider whether you’re likely to have the $400-500 readily available to pay one of those hefty quarterly bills when they come around, or whether you’re better off budgeting for those smaller bills of about $130-150 a month.

When it comes to how you go about paying, direct debit seems like a no brainer, especially when it could mean you pay a little less as a result. But people have their reasons for not wanting to pay this way – and that’s OK, as long as you understand your options, and pay on time.

However often you pay your energy bills, just make sure you’re getting a good deal. It’s easy to fall into the trap of receiving a bill in the mail and begrudgingly paying it without question. Remember that there can be a big difference between the cheapest and most expensive energy deals out there, so you’ll have to be proactive to search out better value.

Image credits: suksom/Shutterstock.com, FGC/Shutterstock.com, hafakot/Shutterstock.com

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